Overview of the 2018 White Paper on Information andCommunications in Japan
Economic Research Office, ICT Strategy Policy Division,
Information and Communications Bureau,
Ministry of Internal Affairs and Communications

1. Introduction

The ever expanding use of the Internet and widespread
penetration of the Internet of Things (IoT) is fueling massive
growth in big data. Using artificial intelligence (AI) to analyze
and interpret this data opens the way to the creation of new value.
A different view holds that we are in the era of a digitaltransformation in which society and the economy become driven
by data. This transformation is set in motion when ICT—AI, IoT,etc.—began to be integrated into conventional socio-economic
systems: infrastructures, institutions, organizations, production
methods, and so on. These socio-economic systems will bereshaped to exploit ICT. We can also anticipate that, as the realworld and cyberspace are seamlessly integrated, many partially
optimized systems and institutions that until now have been
shut away in particular sectors or organizations will emerge asfully optimized solutions that are available to society as a whole(Figure 2).
This paper will provide an overview of Chapters 2 to 4 of thewhite paper, which deal primarily with the creation of new value
through ICT innovation.

On July 3, 2018, the Ministry of Internal Affairs andCommunications (MIC) published the 2018 White Paper on
Information and Communications in Japan. This year’s white
paper*1 focuses on the theme “Sustainable Growth by ICT in an
Era of Population Decline.”
The population of Japan has been in decline since the tipping
point in 2008, and the shrinking working-age population coupledwith a growing elderly population could have profound socioeconomic consequences as domestic demand and the scale of theeconomy contract and as labor shortages intensify (Figure 1).
However, harnessing information communication technology(ICT) to create new value by interconnecting myriad things—
people, objects, organizations, communities, and more—mayoffer a way to avoid the bleak consequences of this demographic
trend. ICT can lead the way to sustainable economic growtheven in the face of population decline by stimulating demand, byboosting productivity, and by promoting social and labor force
participation.

■ Figure 1: Change of the population and population composition of Japan（10 k）
14,00012,00010,000Estimated ﬁgures after 2016

8,000
6,000
4,000

Total population＊1 http://www.soumu.go.jp/johotsusintokei/whitepaper/index.html.
http://www.soumu.go.jp/johotsusintokei/whitepaper/eng/WP2018_outline.pdf

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■ Figure 2: Digital transformation
Shift from partialoptimization to total
optimization through“being connected”

PresentReal world

Easing traﬃccongestion

Cyberspace

FutureComfortabletransportation(self-driving)eﬃciency
improvement

The world wherethe real world andthe cyber space areseamlessly connected
AIProductivity
improvement

BD

Safe andsecure society

Safe buildings
Database

BD
IoT
AI

Prevention ofenvironmental
destruction

Early detectionof diseases

2. Formation of New Economies through ICT(white paper chapter 2)
ICT is expected to contribute to sustainable growth ofdemand. Here we will highlight the potential role of ICT in theformation of new markets and economies, that transcend thebarriers separating industries with several examples of X-Tech*2
and the sharing economy.
(1) Development of X-Tech
There has been significant movement in recent years to exploit
digital technology and new ICT across a wide range of industries
and types of businesses. Often described under the rubric ofX-Tech, we now have FinTech in finance, EdTech in education,
MedTech in medicine, and so on.

Sustainable society

Improvement inquality of healthTaking just one example, FinTech opens the way for onestop financial services encompassing household accounts anddistribution of assets to different financial institutions, and AIbased optimal asset management for users and investment services
involving relatively small amounts of money, which would help
revitalize Japanese asset management.
(2) Sharing economy
By utilizing online ICT platforms, individuals are able
to participate in the market as service providers. The typicalexample is that of a sharing economy. The sharing economy
grows consumption by bringing latent demand to the surface
and eliminating supply shortages, while markedly expanding theeffects of peripheral businesses and services (Figure 3).

■ Figure 3: I mage of sharing economy’s contribution to economy (example of private lodging service)
Expand consumption by eliminating supply shortages
Couldn't get a hotel when
I wanted, but luckily got aroom in a private lodging.

Nice to not have to getup if guest arrive late atnight.

Private lodging service

Didn't want to stay at an
expensive hotel, so let's
stay at economical privatelodging.

Key delivery
serviceExpansion of peripheral businesses

Expand consumption by latent demand＊2 Pronounced “x tech” or “cross tech”.

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3. Productivity Improvement andOrganizational Reform through ICT(white paper chapter 3)
A decline in national population is typically reflected in adecrease in gross domestic product (GDP), or total value of goods
and services in the country. Improved productivity is essential
to boost the additional value of products with limited humanresources. Here we highlight the importance of implementing
ICT together with organizational reform to boost productivity.
(1) Labor productivity in Japan
Japan ranked 21st in a comparison of labor productivity per
man-hour of 35 OECD member countries, and had the lowest
productivity among the G7 economies (per employee in 2016).
(2) Improving labor productivity
Labor productivity is defined as (amount of additional value)/(labor input); that is, the amount of additional value createdby a worker in an hour. Productivity can be increased by either
reducing the denominator or by increasing the numerator,
but leveraging ICT to increase the numerator (i.e., improving
amount of additional value) side of the equation is generally more
effective. A trial calculation was conducted based on the resultsof a questionnaire sent out to Japanese companies to determine
whether improving the efficiency of labor input or increasing
additional value was more effective in boosting the productivityof labor. We found that the productivity of labor could beenhanced 1.1 times by saving labor associated with the work,
but productivity could be enhanced 4.0 times by adding value toexisting products and services or by developing new products andservices (Figure 4).
(3) Necessity of organizational reform
Japan’s labor productivity growth lags behind the U.S. andother G7 nations. Measures for shoring up Japan’s productivity canbe divided into four types of innovations: organizational, process,marketing, and product.
In a survey comparing recent innovations by major American
corporations versus Japanese corporations, it was found that U.S.
corporations outperformed Japanese corporations across theboard in all four types of innovations. In terms of organizationalinnovation, for example, the U.S. corporations completed
corporate restructuring more than three years ago, while a goodnumber of Japanese corporations were still struggling withrestructuring over the past three years (Figure 5). Organizational
reform is clearly essential to derive increased profits from ICT,and we can anticipate that Japanese corporations will step up theirrestructuring efforts in the years ahead.

4. Promoting Inclusion through ICT(white paper chapter 4)
As the population of Japan continues to shrink, metropolitan
areas are expected to become more densely populated and thenumber of single-person households will continue to rise. Thismeans that the population of socially isolated people may increase,since they lack trustworthy people such as family members toprovide companionship and assistance in case of emergencies.
One strategy for augmenting the labor force as the population
continues to decline will be to open the workforce to greater
participation from various categories of people who until now havebeen marginalized or underemployed such as women, older adults,and people with disabilities.
(1) C ommunication through ICT to promote greater social
participation
Social media has become immensely popular, which has madeit much easier for people to connect and interact than was possible
in the days before the spread of the Internet. Social media provides■ Figure 4: Productivity and problem solving solutions through ICT

Major management
challenges
High cost
structure

Aspects resolved
through ICT(1) Improveeﬃciencyof labor input

Insuﬃcient
manpower
Commodiﬁcationof products

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additionalvalue

Increase in laborproductivity by ICT

Saving labor for operations…1.1 times higher

Improving the eﬃciency ofoperational processes…2.5 times higher

Enhancing the additional value ofexisting products and services
Development of new products,services…4.0 times higher

■ Figure 5: Innovation in Japan vs. U.S.
0〈Japan〉

2Organization

42.96

3.4

Marketing

3.5

Products

3.3

Last 3 years

106.3

3.4

Process

86.3

2.9

More than 3 years ago

Underlined ﬁgures: total of last 3 years and more than 3 years
0〈U.S.〉
Organization
Process

24

1.9

8.2

10
8.7
9.4

8.3

Marketing

Last 3 years

86.7

1.3

Products

64.9
More than 3 years ago

Underlined ﬁgures: total of last 3 years and more than 3 yearsBased on a survey, we asked corporations to provide examples of each typeof innovation. We then calculated averages for the total number of examples.

a way of gathering information, a way of making new friends, anda host of other beneficial uses. In surveying what Japanese users
and foreign users like about social media, we found that far fewer
Japanese users (compared with users in other countries) saw thebenefits of social media for (a) building new relationships and (b)strengthening existing relationships.
Social media also offers a way to complement or supplementcontacts in the real world. For example, visualization throughICT enables people who are in a position to help to reach out andassist communities that need help, it opens the way to communitybased SNSs and sharing economy platforms that promote mutual
aid and cooperation among local people in the community, andsupports a wide range of initiatives all across the country.
(2) New ways of working supported by ICT
ICT supports diverse ways of working that enable people toclosely communicate with colleagues in the office and to workwithout actually going to the workplace The 2018 White Paper
on Information and Communications discusses three types of ICTsupported work options is some detail: (1) business ICT tools, (2)telework, and (3) crowdsourcing.
(a) Business ICT tools
In recent years we have seen a vast increase in deployment
and usage of tools facilitating communications, workforce
management, and other administrative capabilities such as inhouse SNS, chat, web conferencing, and other advanced features.
A survey revealed that adoption of business ICT tools at an officeor company did not have any discernable impact on ease of workfor individual employees. Yet we also found that the employees
who were most positive in their adoption and use of the ICT tools
evaluated ease of work and working conditions more favorably.
This would indicate that not only adoption of business ICT tools
but positive use of the tools by employees is connected to theperception of ease of work or favorable working conditions.
(b) Telework
Telework is a flexible workstyle that exploits ICT to enable
employees to make more efficient use of time and spaces.
According to the Communications Usage Trend Survey in 2017,13.9% of Japanese companies currently support telework in someform, and more widespread adoption of the practice is anticipated.
Through an interview with employees who are not using but
desiring to use telework, we discovered there are yet a number ofsticking points in the corporate work environment and corporate
rules that prevent telework schemes from being implemented.
Most of the responses emphasized that “lack of relevant rules inthe company” and “lack of social environment for telework.”(c) Crowdsourcing
A survey regarding crowdsourcing revealed that 30% ofrespondents had heard of the concept, but only 4.7% had actuallyused crowdsourcing in performing their work. We assume that
crowdsourcing will achieve far greater name recognition and usage
among independent teleworkers as they take on crowdsourcingrelated contracts and assignments in the years ahead.

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